<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission file number 1-10767
-------
VALUE CITY DEPARTMENT STORES, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1322832
------------------------------------ -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3241 Westerville Road, Columbus, Ohio 43224
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 471-4722
--------------
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15
(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at June 1, 2000
------------------------------- ---------------------------------
Common Stock, Without Par Value 33,603,312 Shares
<PAGE> 2
VALUE CITY DEPARTMENT STORES, INC.
TABLE OF CONTENTS
===============================================================================
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
April 29, 2000 and January 29, 2000 3
Consolidated Statements of Income for the three months
ended April 29, 2000 and May 1, 1999 4
Consolidated Statements of Cash Flows for the three
months ended April 29, 2000 and May 1, 1999 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk N/A
PART II. OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information N/A
Signatures 13
Item 6. Exhibits and Reports on Form 8-K
Part A: Exhibit 27 Financial Data Schedule for First Quarter Form 10-Q 14
Exhibit 10.1.5 Corporate Services Agreement, dated June 1, 2000,
between the Company and SSC. 15
Part B: Reports on Form 8-K On February 4, 2000 and April 6, 2000,
Forms 8-K were filed relating to Item 5 - "Other Items" with both
forms relating to the acquisition of Filene's Basement Corp., a
Delaware corporation and wholly-owned subsidiary of the Company,
during the quarter ended April 29, 2000.
</TABLE>
page 2
<PAGE> 3
VALUE CITY DEPARTMENT STORES, INC.
PART 1. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
APRIL 29, JANUARY 29,
2000 2000
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 7,726 $ 6,027
Accounts receivable, net 20,647 10,131
Receivables from affiliates 1,719 299
Inventories 566,669 412,479
Prepaid expenses and other assets 20,855 8,544
Deferred income taxes 18,102 18,052
----------- -----------
Total current assets 635,718 455,532
Property and equipment, at cost:
Furniture, fixtures and equipment 209,226 191,632
Leasehold improvements 156,785 142,066
Land and building 1,049 1,376
Capital leases 45,017 42,328
----------- -----------
Accumulated depreciation and amortization 412,077 377,402
Property and equipment, net (180,165) (169,907)
----------- -----------
231,912 207,495
Investment in joint venture 9,410 9,679
Goodwill and tradenames, net 54,168 45,566
Lease acquisition costs, net 21,071 11,825
Other assets 32,174 14,084
----------- -----------
Total assets $ 984,453 $ 744,181
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 236,370 $ 164,196
Accounts payable to affiliates 4,823 4,532
Accrued expenses:
Compensation 11,858 17,118
Taxes 29,789 22,604
Other 59,265 41,611
Current maturities of long-term obligations 16,488 460
----------- -----------
Total current liabilities 358,593 250,521
Long-term obligations, net of current maturities 271,874 144,168
Deferred income taxes and other noncurrent liabilities 3,188 7,131
Commitments and contingencies -- --
Shareholders' equity:
Common shares, without par value; 80,000,000 authorized; issued, including
treasury shares, 33,552,230 shares and
32,992,122 shares, respectively 121,462 114,733
Contributed capital 18,723 17,868
Retained earnings 213,000 212,946
Deferred compensation expense, net (2,328) (2,513)
Treasury shares, at cost, 7,651 and 87,651 shares, respectively (59) (673)
----------- -----------
Total shareholders' equity 350,798 342,361
----------- -----------
Total liabilities and shareholders' equity $ 984,453 $ 744,181
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
page 3
<PAGE> 4
VALUE CITY DEPARTMENT STORES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
================================================================================
THREE MONTHS ENDED
----------------------
APRIL 29, MAY 1,
2000 1999
--------- ---------
Net sales, excluding sales of licensed departments $ 462,053 $ 344,481
Cost of sales (284,322) (214,859)
--------- ---------
Gross profit 177,731 129,622
Selling, general and administrative expenses (174,426) (126,820)
License fees from affiliates 2,153 1,523
Other operating income 277 933
--------- ---------
Operating profit 5,735 5,258
Interest expense, net (5,354) (2,480)
(Loss) gain on disposal of assets, net (20) 13
--------- ---------
Income before equity in loss of joint venture
and provision for income taxes 361 2,791
Equity in loss of joint venture (269) (111)
--------- ---------
Income before provision for income taxes 92 2,680
Provision for income taxes (37) (1,118)
--------- ---------
Net income $ 55 $ 1,562
========= =========
Basic and diluted earnings per share $ 0.00 $ 0.05
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
page 4
<PAGE> 5
VALUE CITY DEPARTMENT STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
APRIL 29, MAY 1,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 55 $ 1,562
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 9,801 7,884
Deferred income taxes and other noncurrent liabilities (1,939) (2,697)
Equity in loss of joint venture 269 111
Loss (gain) on disposal of assets 20 (13)
Change in working capital, assets and liabilities excluding
effects of acquisition:
Receivables (9,632) (351)
Inventories (127,023) (39,258)
Prepaid expenses and other assets (9,939) (4,899)
Accounts payable 62,332 33,623
Accrued expenses (10,018) 7,371
--------- ---------
Net cash (used in) provided by operating activities (86,074) 3,333
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (13,379) (6,529)
Proceeds from sale of assets -- 31
Acquisitions (3,506) --
Other assets and lease acquisition costs (27,117) (2,191)
--------- ---------
Net cash used in investing activities (44,002) (8,689)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common shares 3,070 226
Net proceeds (payments) under long-term credit facility 128,705 (28)
--------- ---------
Net cash provided by financing activities 131,775 198
--------- ---------
Net increase (decrease) in cash and equivalents 1,699 (5,158)
Cash and equivalents, beginning of period 6,027 20,895
--------- ---------
Cash and equivalents, end of period $ 7,726 $ 15,737
========= =========
Non-cash transactions:
Issuance of common shares related to acquisition $ 5,500 --
Contribution made in treasury shares $ 1,080 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5
<PAGE> 6
VALUE CITY DEPARTMENT STORES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 29, 2000
(UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Value City Department Stores, Inc. ("VCDS") and its wholly owned
subsidiaries. These entities are herein referred to collectively as the
"Company." The Company operates a chain of full-line, off-price department
stores, principally under the name "Value City," as well as 17 Filene's
Basement stores specializing in high-end brand name men's and women's
apparel, accessories and home goods and a chain of better-branded off-price
shoe stores under the name "DSW Shoe Warehouse."
To facilitate comparisons with the current year, certain amounts in prior
years' financial statements have been reclassified to conform to the
current year presentation.
2. ACQUISITIONS
On March 17, 2000, the Company completed through its wholly owned
subsidiary, Base Acquisition Corp. ("Base Acquisition"), the acquisition of
substantially all of the assets and assumed certain liabilities of Filene's
Basement Corp., a Massachusetts corporation, and Filene's Basement, Inc., a
wholly owned subsidiary of Filene's Basement Corp. (collectively,
"Filene's") pursuant to the closing of an asset purchase agreement, dated
February 2, 2000.
The purchase price included cash of $3.5 million paid at closing, and
403,208 shares of the Company's common stock with an agreed value of $5.5
million and the assumption of specified liabilities. The assumed
liabilities included the payment of amounts outstanding under Filene's
debtor-in-possession financing facility of approximately $30.6 million and
certain trade payable and other obligations which will be paid in the
ordinary course. The acquisition will be accounted for as a purchase.
Preliminary amounts have been determined using available financial
information and management estimates. Final allocation of the purchase
price will be determined based on the completion of a fair market valuation
of the net assets acquired.
The acquisition was funded by cash from operations and a portion of the
proceeds from the New Bank Facility.
Accordingly, the results of operations for the three months ended April 29,
2000 include the operations of Filene's for the six week period beginning
March 17, 2000. The following unaudited pro forma consolidated financial
results are presented as if the March 2000 acquisition had taken place at
the beginning of the quarter ended April 29, 2000 and May 1, 1999. The pro
forma results are not indicative of results of operations in future or in
the period presented below. Included in the pro forma results are the
adjustments to depreciation and amortization based on the purchase price
allocation, the effects of the issuance of additional common shares and
interest on acquisition related borrowings (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
2000 1999
---------- -------
<S> <C> <C>
Net Sales $495,454 $481,304
Net Loss $ (3,877) $ (427)
Basic and diluted earnings per share $ (0.12) $ (0.01)
</TABLE>
Page 6
<PAGE> 7
VALUE CITY DEPARTMENT STORES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 29, 2000
(UNAUDITED)
================================================================================
3. SEGMENT REPORTING
The Company is managed in three operating segments: Value City Department
Stores, DSW Stores and Filene's Basement stores, acquired effective March
17, 2000. All of the operations are located in the United States. The
Company has identified such segments based on management responsibility and
measures segment profit as operating profit which is defined as income
before interest expense and income taxes. Corporate assets include goodwill
and loan costs related to the Shonac acquisition.
THREE MONTH PERIOD ENDED APRIL 29, 2000 (IN THOUSANDS):
<TABLE>
<CAPTION>
VALUE CITY DSW FILENE'S CORPORATE TOTAL
---------- --- -------- --------- -----
<S> <C> <C> <C> <C> <C>
Net sales $347,807 $88,387 $25,859 $462,053
Operating profit 347 2,991 2,397 5,735
Identifiable assets 832,675 59,621 61,185 $30,972 984,453
Capital expenditures 11,259 2,120 0 13,379
Depreciation and amortization 7,980 475 380 966 9,801
</TABLE>
THREE MONTH PERIOD ENDED MAY 1, 1999 (IN THOUSANDS):
<TABLE>
<CAPTION>
VALUE CITY DSW FILENE'S CORPORATE TOTAL
---------- --- -------- --------- -----
<S> <C> <C> <C> <C> <C>
Net sales $288,078 $56,403 $344,481
Operating profit 3,262 1,996 5,258
Identifiable assets 527,190 56,255 $32,904 616,349
Capital expenditures 5,941 588 6,529
Depreciation and amortization 6,611 450 823 7,884
</TABLE>
Page 7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
===============================================================================
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationships to net sales of the listed items included in the Company's
Consolidated Statements of Income.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------
April 29, 2000 May 1, 1999
-------------- -----------
<S> <C> <C>
Net sales 100.0% 100.0%
Gross profit 38.5 37.6
Selling, general and administrative expenses (37.8) (36.8)
License fees from affiliates and other operating income 0.5 0.7
------- -------
Operating profit 1.2 1.5
Interest expense, net, and (loss) gain on disposals (1.1) (0.7)
Equity in loss of joint venture (0.1) -
------- -------
Income before income taxes 0.0 0.8
Provision for income taxes 0.0 (0.3)
------- -------
Net income 0.0% 0.5%
====== =======
</TABLE>
page 8
<PAGE> 9
VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
================================================================================
THREE MONTHS ENDED APRIL 29, 2000 COMPARED TO THREE MONTHS ENDED MAY 1, 1999
The Company's net sales increased $117.6 million, or 34.1%, from $344.5
million to $462.1 million. Comparable store sales increased 6.5%. Net sales for
the department stores ("Value City") increased $52.9 million, or 21.5%, from
$245.7 million to $298.6 million. Value City's comparable store sales increased
4.2%, or $10.3 million. The shoe departments in Value City's stores contributed
net sales of $49.2 million with comparable store sales increase of 1.9%. For the
quarter, non-apparel sales increased 12.2% and apparel sales increased 24.0%. On
a comparable store basis, non-apparel sales increased 5.1% and apparel sales
increased 7.2%. DSW Shoe Warehouse ("DSW") achieved sales of $88.4 million with
a 20.5% comparable store sales increase. This year's first quarter includes
$25.9 million of net sales for the 17 Filene's Basement stores acquired
effective March 17, 2000.
Gross profit increased $48.1 million from $129.6 million to $177.7
million, and increased as a percentage of sales from 37.6% to 38.5% due
primarily to a decrease in the level of markdowns as a percentage of sales.
Selling, general and administrative expenses ("SG&A") increased $47.6
million from $126.8 million to $174.4 million, and increased as a percentage of
sales from 36.8% to 37.8%. $25 million of the increase in SG&A is attributable
to new stores, net of closed stores, increased distribution and transportation
costs account for $6.6 million, approximately $1.7 million related to home
office overhead costs and $5.3 million related to comparable store operations.
SG&A expenses for Filene's Basement were $9.0 million. New store pre-opening
expenses for the quarter were $1.2 million greater than last year.
Based upon its experience, the Company estimates the average cost of
opening a new department store to range from approximately $4.5 million to $6.5
million and the cost of opening a new shoe store to range from approximately
$1.1 million to $2.0 million including leasehold improvements, fixtures,
inventory, pre-opening expenses and other costs. Preparations for opening a
department store generally take between eight and twelve weeks, and preparations
for a shoe store generally takes eight to ten weeks. Pre-opening costs are
expensed as incurred. It has been the Company's experience that new stores
generally achieve profitability and contribute to net income after the first
full year of operations. 14 department stores opened less than twelve months had
a pre-tax net operating loss of $1.4 million for the current three month period
including $2.6 million of pre-opening expenses. Four stores opened less than 12
months during last year's three month period had a pre-tax net operating loss of
$0.6 million. 16 DSW stores opened less than twelve months had a pre-tax net
operating loss of $1.7 million, including $1.7 million of pre-opening expenses.
Seven stores opened less than twelve months during last year's three month
period had a pre-tax net operating loss of $0.2 million after recognizing $0.7
million of pre-opening expenses.
License fees from affiliates and other operating income were
approximately $2.4 million for both periods and declined as a percentage of
sales from 0.7% of sales to 0.5%.
Operating profit increased $0.5 million from $5.2 million to $5.7 million
and decreased as a percentage of sales from 1.5% to 1.2%.
Interest expense, net of interest income, increased $2.9 million from
$2.5 million to $5.4 million and increased as a percentage of sales from 0.7% to
1.1%. The increase is due primarily to increased borrowings for the acquisition
of Gramex Retail Stores, Inc. and Filene's Basement, new store openings and an
increase in inventory levels.
Equity in the loss of the joint venture represents the Company's fifty
percent interest in a joint venture with Mazel Stores, Inc. The loss increased
from $0.1 million to $0.3 million.
Income before provision for income taxes decreased $2.6 million from $2.7
million to $0.1 million, and decreased as a percentage of sales from 0.8% to
0.0% as a result of the above factors.
page 9
<PAGE> 10
VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
Net working capital was $277.1 million at April 29, 2000 compared to $205.0
million at May 1, 1999. Current ratios at those dates were each 1.8.
Net cash (used in) provided by operating activities totaled ($86.1) million
and $3.3 million for the three months ended April 29, 2000 and May 1, 1999,
respectively.
Net income, adjusted for depreciation and amortization, provided $9.9
million of operating cash flow for the three months ended April 29, 2000. This
was decreased by $64.7 million representing an increase in inventories net of an
increase in accounts payable. Other changes in working capital assets and
liabilities used $31.3 million.
During the three months ended April 29, 1999, net income adjusted for
depreciation and amortization, provided $9.4 million of operating cash flow.
This was reduced by $5.6 million representing an increase in inventories net of
an increase in accounts payable. Other changes in working capital assets and
liabilities used $0.5 million.
Net cash used in investing activities totaled $44.0 million and $8.7
million for the three months ended April 29, 2000 and May 1, 1999, respectively.
Net cash used for capital expenditures was $13.4 million and $6.5
million for the three months ended April 29, 2000 and May 1, 1999, respectively.
During the 2000 period, capital expenditures included $7.6 million for new
stores, $2.2 million on existing stores, $2.0 million for MIS equipment upgrades
and new systems and $1.6 million for other capital expenditures.
On March 17, 2000, the Company renegotiated its credit facility and
replaced the existing facility with a $300 million Amended and Restated Credit
Agreement, dated as of March 15, 2000 (the "New Bank Facility"). It has a three
year term ending March 15, 2003 and replaced a $167.5 million facility that
would have matured in May 2001. The New Bank Facility is secured only by a
pledge of the stock of Base Acquisition and the Filene's assets acquired. See
Note 2. It provides for various borrowing rates, currently equal to 200 basis
points over LIBOR. The interest rate on $40.0 million has been locked in at a
fixed annual rate of 7.395% through March 2001. The interest rate on $35.0
million has been locked in at a fixed annual rate of 6.99% through April 18,
2003.
On March 17, 2000, the Company also closed a $75.0 million Senior
Subordinated Convertible Loan Agreement, dated as of March 15, 2000 (the "Senior
Facility") with Prudential Securities Credit Corporation ("Prudential"), as
lender. The Senior Facility also bears interest at various rates, currently
equal to 250 basis points over LIBOR. The interest rate increases an additional
50 basis points every 90 days after the first anniversary date. The Senior
Facility is due in September 2003. However, if the Company has not repaid the
Senior Facility prior to March 17, 2001, from the proceeds of an equity offering
or other subordinated debt acceptable to the lenders under the New Bank
Facility, then after that date Prudential has the right to convert the debt into
stock of the Company at a price equal to 95% of the 20-day average of high and
low sales prices reported on the New York Stock Exchange at the time of
conversion. After that date, Prudential also has the right to require SSC, the
owner of a majority of the Company's outstanding stock, to purchase the Senior
Facility at par plus accrued interest, pursuant to the terms of a Put Agreement,
dated as of March 15, 2000 between Prudential and SSC. The Company paid SSC a
one time fee of 200 basis points, or $1.5 million, at closing in consideration
for entering into the Put Agreement.
Both the New Bank Facility and the Senior Facility contain customary,
affirmative and negative covenants, including certain financial covenants. At
April 29, 2000, the LIBOR rate was 6.13%, borrowings aggregated $189,000,000 and
$39.0 million of letters of credit were issued and outstanding for merchandise
purchases under the credit facility.
The Company has provided an unconditional guarantee of 50% of amounts
outstanding on VCM's $25.0 million revolving line of credit. At April 29, 2000,
the aggregate amounts guaranteed were $8.0 million.
The Company may from time to time consider acquisitions of department store
assets and companies. Acquisition transactions, if any, are expected to be
financed through a combination of cash on hand from operations, available
borrowings under existing credit facilities and the possible issuance from time
to time of long-term debt or equity securities. Depending upon the conditions in
the capital markets and certain other factors, the Company may from time to time
consider the issuance of debt or equity securities, or other possible capital
market transactions, the proceeds of which could be used to refinance current
indebtedness or for other corporate purposes.
The Filene's acquisition was funded by cash from operations and a portion
of the proceeds from the New Bank Facility.
page 10
<PAGE> 11
VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
================================================================================
ADOPTION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") periodically issues
Statements on Financial Accounting Standards ("SFAS"), some of which require
implementation by a date falling within or after the close of the Company's
fiscal year.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS No. 137, establishes accounting and reporting
standards for derivative instruments and for hedging activities. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The adoption of SFAS No. 133 is not expected to have a significant impact on the
Company's financial statements.
INCOME TAXES
The effective tax rate for the three months ended April 29, 2000 and May 1,
1999 was 40.2% and 41.7%, respectively.
INFLATION
The results of operations and financial condition are presented based upon
historical cost. While it is difficult to accurately measure the impact of
inflation because of the nature of the estimates required, management believes
that the effect of inflation, if any, on the results of operations and financial
condition has been minor.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
this Report, other filings with the Security and Exchange Commission or made by
management of the Company involve risks and uncertainties, and are subject to
change based on various important factors. The following factors, among others,
in some cases have affected and in the future could affect the Company's
financial performance and actual results and could cause actual results for 2000
and beyond to differ materially from those expressed or implied in any such
forward-looking statements: decline in demand for the Company's merchandise, the
ability to repay the $75.0 million Senior Facility through an equity offering or
refinancing, the availability of desirable store locations on suitable terms,
changes in consumer spending patterns, consumer preferences and overall economic
conditions, the impact of competition and pricing, changes in weather patterns,
changes in existing or potential duties, tariffs or quotas, paper and printing
costs, and the ability to hire and train associates.
Historically, the Company's operations have been seasonal, with a
disproportionate amount of sales and a majority of net income occurring in the
back-to-school and Christmas selling seasons. As a result of this seasonality,
any factors negatively affecting the Company during this period, including
adverse weather, the timing and level of markdowns or unfavorable economic
conditions, could have a material adverse effect on the Company's financial
condition and results of operations for the entire year.
page 11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
VALUE CITY DEPARTMENT STORES, INC.
===============================================================================
A. The Company held its 1999 Annual Meeting of Shareholders on June 1, 2000.
Holders of 29,655,472 Common Shares of the Company were present
representing 88.82% of the Company's 33,389,422 Common Shares issued and
outstanding and entitled to vote at the meeting.
B. The following persons were elected as members of the Company's Board of
Directors to serve until the annual meeting following their election or
until their successors are duly elected and qualified. Each person
received the number of votes for or the number of votes with authority
withheld indicated below.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
<S> <C> <C>
Henry L. Aaron 28,023,924 1,631,548
Ari Deshe 28,028,615 1,626,857
Jon P. Diamond 28,028,206 1,627,266
Martin P. Doolan 28,028,763 1,626,709
Richard Gurian 28,024,025 1,631,447
Dr. Norman Lamm 28,028,625 1,626,847
David L. Nichols 28,029,125 1,626,347
Geraldine Schottenstein 28,028,992 1,626,480
Jay L. Schottenstein 28,028,992 1,626,480
Saul Schottenstein 28,028,892 1,626,580
Robert L. Shook 28,023,729 1,631,743
Robert M. Wysinski 28,029,019 1,626,453
</TABLE>
C. The proposal to approve an amendment increasing the number of common
shares available for issuance under the Company's 1991 Stock Option Plan
from 3,000,000 to 4,000,000 passed with 26,747,548 shares voting in favor,
2,904,815 shares voting against and 3,108 shares abstaining. In addition,
the proposal to approve an amendment increasing the number of common
shares available for issuance under the Company's Non-employee Director
Stock Option from 130,000 to 250,000 passed with 29,273,835 shares voting
in favor, 375,580 shares voting against and 6,054 shares abstaining.
D. Not applicable.
page 12
<PAGE> 13
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALUE CITY DEPARTMENT STORES, INC.
(Registrant)
By /s/ Robert M. Wysinski
------------------------------------------
Robert M. Wysinski, Senior Vice President,
Chief Financial Officer, Treasurer
And Secretary *
Date: June 9, 2000
------------------
-------------------------------------------------------------------------------
* Mr. Wysinski is the principal financial officer and has been duly authorized
to sign on behalf of the registrant.
page 13
